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PURE
CUSTOMER SEGMENTATION AND ANALYSIS
Submitter By:
Pooja S- 092517002
Roshni D Singh- 092517012
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TABLE OF CONTENTS
INTRODUCTION ............................................................................................................... 3WHY ORGANIC?? ............................................................................................................ 4
INDUSTRY SECTOR ......................................................................................................... 5
TRENDS IN THE INDUSTRY .......................................................................................... 6
MAJOR PLAYERS ............................................................................................................ 7
THE LEADING F&G RETAIL STORES ......................................................................... 7
FAQ’s- CUSTOMER INSIGHTS..................................................................................... 10
MAIN COMPETITOR- NAMDHARI FRESH ............................................................... 12
STRATEGIES ................................................................................................................... 13
HOW AND WHY OUR BRAND “PURE” WILL SUCCEED? .................................. 13
CHALLENGES WE HAVETO OVERCOME ............................................................ 13
THE ORGANIC CUSTOMER ......................................................................................... 14
CUSTOMER SEGMENTS FOR “PURE”- CLUSTERS ................................................ 16
CONCLUSION ................................................................................................................. 17
QUESTIONNAIRE ........................................................................................................... 18
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INTRODUCTION
Organic foods are foods that are produced using methods that do not involve modern
synthetic inputs such as pesticides and chemical fertilizers, do not contain genetically, and are
not processed using irradiation, industrial solvents, or chemical food additives.
For the vast majority of human history, agriculture can be described as "organic"; only during
the 20th century was a large supply of new synthetic chemicals introduced to the food supply.
The organic farming movement arose in the 1940s in response to
the industrialization of agriculture known as the Green Revolution.
Organic food production is a heavily regulated industry, distinct from private gardening.
Currently, the European Union, the United States, Canada, Japan and many other countries
require producers to obtain special certification in order to market food as "organic" withintheir borders.
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WHY ORGANIC??
Organic is good for you and your planet, is kind to animals and wildlife and allows us make a
big difference - simply through the way we shop. With all these benefits, it‘s easy to see why
organic delivers such good value for money. When you buy organically produced farmproducts, you support farming techniques that improve soil fertility without the use of
petroleum-based synthetic fertilizers. You protect surface and groundwater from exposure to
persistent, toxic pesticides. Organic farmers work with, not against, the balance found in a
healthy eco-system: wildlife is encouraged by including forage crops in rotation and by
retaining fence rows, wetlands and other natural areas where wildlife can thrive.
Better for your planet
Today, substantial amount of greenhouse gas emissions come from food and farming.
Nitrogen fertiliser manufacturing is the worst offender. To produce just one tonne takes one
tonne of oil, seven tonnes of greenhouse gasses and one hundred tonnes of water. Organic
farmers work with nature to feed the soil and control pests. By choosing organic, local and
seasonal - we can significantly reduce our carbon footprint.
Great for You
No food has higher amounts of beneficial minerals, essential amino acids and vitamins thanorganic food. Organic food avoids pesticides and all controversial additives
including aspartame, tartrazine, MSG and hydrogenated fats. Organic food contains higher
levels of vitamin C and minerals like calcium, magnesium, iron and chromium as well as
cancer-fighting antioxidants and Omega 3.
Encourages wildlife
The plant, insect and bird life is substantially greater on organic farms. Organic farming relies
on wildlife to help control natural pests, so wide field edges are left uncultivated for bugs,
birds and bees to flourish. They are also not sprayed away by the fertilisers, chemicals and
pesticides routinely used on non-organic farms. GM free Genetically modified (GM) crops
and ingredients are banned under organic standards.
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INDUSTRY SECTOR
Food and grocery segment constitutes about 62 per cent of the total INR 12000 billion (USD
270 billion) Indian retail market. There are about 12 million retailers in India and 80 per cent
of those are actually mom and pop shops run by family members. The modern organized
retailing is about 3 per cent of the total. In South, however, the modern retailing is said to be
10% of the total. As per IMAGES F&R Research estimates organized food and grocery retail
market was a mere 0.5 per cent of the total in 2004. This organized segment has now grown
to just about 0.8 per cent in 2006 valued at INR 500 billion at 2004-05 prices. The organized
food and grocery retail sector grew at the rate of 35.6 percent in 2005 and at 42.5 per cent in
2006 over the previous year.
Until recently, this segment was dominated by players with regional presence as most of
them had established themselves in local markets only such as Subhiksha in Chennai,
Trinethra in Andhra Pradesh and Margin Free Markets in Kerala. Food World tried to expand
to West India (Pune) but failed. This was primarily attributed to inefficient supply chain
management and lack of investment in establishing effective SCM network in different
regions. But players like Food Bazaar has established a pan-India presence and Subhiksha has
moved towards north India and currently testing the NCR market.
It can be noted that grocery retailing accounts for nearly half of the packaged fast moving
consumer goods (FMCG) sales. ACNielsen study indicates that there will be significant
switch in spending from traditional grocery stores to modern stores in the region. (Source:
India Retail Report 2007: An Images F&R Research)
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TRENDS IN THE INDUSTRY
Changing consumer preferences due to increased disposable income. Consumers are
demanding wider range and unique merchandise with consistent quality –‗all under
one roof‘
Gradual increasing cosmopolitization of Indian population due to western influence
and internationalization of palates and lifestyle created the need of wider array of
products and services
New types of packaged and convenience foods such as processed meat and meat
products requiring refrigerated storage and transportation and retail shelf space
As of now the emphasis in food and grocery retailing is on dry groceries. The wet
groceries like fruits, vegetables and meat products account for only 3-5 per cent of the
overall offering of the organized players. However, consumers spending indicate that
about 40% of total consumer spending is on wet groceries. The major challenge
would thus be putting appropriate supply chain management infrastructure for wet
products and those who will be able to do it faster will have a major differentiation
advantage to leverage. The signs of eliminating involvement of middlemen and
backward integration in SCM among Indian retailers are increasingly visible.
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MAJOR PLAYERS
Major players in the fray are Big Bazaar ( belonging to Pantaloon), Giant (rechristened as
Spencer‘s), Star India Bazaar (of Tata Group), Landmark (in association with South African
Retail giant Shoprite), Reliance Industries, Rainbow Retail (of Raheja Group), Godrej, Adani,
Trinethra (now under AV Birla Group), Dairy Farm, Jubilant Group among others.
THE LEADING F&G RETAIL STORES
SUBHIKSHA
Chennai based retail chain is the largest discount stores in India with over 315 stores. Started
in 1997 it is the first company to start tie ups with the manufacturers for cost saving. In 2006
it has 315 stores with 60 stores in Bangalore, Mysore and one store in NCR. The turnover of
the company is INR 3.34 billion. They have launched aggressive television campaign to
reach masses. They plan to invest additional INR 1000 million to add 180 more stores in
eight cities of which 100 stores will be in Mumbai city itself. As per plan they would like to
have 600 stores by the year end 2007.
FABMALL
Bangalore based Fabmall operated 12 stores and achieved INR 500 million in sales in 2003-
04. It has been acquired by Trinethra of Hyderabad with 80 outlets in eight cities in Andhra
Pradesh covering retail space of more than 1300000 sqft. Post acquisition, Trinethra had
added five more stores under Fabmall and now operating both the formats. Trinethra super
retail with 172 stores subsequently got acquired by AV Birla Group which acquired 90
percent stake. Balance 10% is still with India Value Fund managed by GW capital, a private
equity fund .By year 2006-07 Trinethra has 198 stores in more than four cities with total areaof 525566 sqft and sales INR 2780 million
FOODWORLD
Dairy Farm International entered Indian market and took over Food World from Spencer as a
route to dilute the shareholding in RPG group. It had a four city presence and 100 stores in
2005-06 as compared to the previous year 79 outlets. Dairy Farm now plans to set up bigger
stores as well as large format stores .As per plan they would like to set up 500 outlets by year
2010.
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SPENCER’S RETAIL
A RPG group company entered into F&G retail in 2001.In the year 2006-07 they had 68
stores in 17 cities with retail space of 582490 sqft. They have both small (2000sqft) as well as
large( 8000-15000 sqft) format outlets selling both fresh products and durable item under one
roof. Small format outlets sell fresh food, groceries, chilled and frozen foods.
FOOD BAZAR
Food Bazaar, the Pantaloon grou p‘s F&G chain , has in all 45 outlets across more than 20
cities and is located within the group‘s value retail format Big Bazaar. Food Bazaar‘s value
proposition – selling below MRP – helped in high stock turn over. It has launched private
label brands of tea, salt, sugar, spice and processed foods. The turnover for the year 2003-04
was INR 1.5 billion which is expected to go up to INR 32.5 billion by year 2010.The
company plans to have 110 outlets in 2007 and 250 outlets in 2010. They have over 10000
SKUs.
TRUMART
Launched by Piramal group and managed by Mumbai based Crossroads. First outlet was
opened in Pune in upscale Bhandarkar Road of 6000 sqft size. They have 12 oulets in five
cities in 2005-06 although started initially in Pune and Mumbai. Now they have 42 outlets (
2006-07) in 14 cities with plan to have 150 outlets in the year 2010.They plan to have 82
outlets in 2007.The theme of their stores is AUOR (All under one roof).
NILGIRI’S
It has pioneered the organized retail operation in the country – started as early as 1905 in
Bangalore. In 2004-05 it has about 140000 sqft retail space which has now gone up to200000 sqft. They have mainly franchisees and a few company owned format outlets. They
have pioneered franchisee model in India in F&G retail.
ARAMBAG FOODMART
It belongs to the Arambag Hatcheries and is a household name in Kolkata. Spread over
Kolkata and other cities in West Bengal company operates 24 stores with an average area of
600-1000 sqft of retail space. It deals in groceries, confectioneries, toiletries, frozen foods
and of course its products Arambag Chicken (dressed chicken). The unique features of these
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stores is below MRP price, good quality and convenient location.There has been gradual
increase in sales from INR 181 million in 2004-05 to INR 212 million in 2005-06 to the
current to INR 260 million now.
NAMDHARI’S FRESH
Namdgari‘s Fresh (NF) a sister concern of Namdhari Seeds Pvt. Ltd, a leading Seed company
was started four years back with a vision to be the leader in Quality Fresh Produce following
Integrated Pest Management Practices with eco friendly bio- agents. Currently they have 13
outlets in Bangalore and 3 more in New Delhi
RELIANCE FRESH
Reliance entered the F&G sector recently with its Reliance Fresh outlets foraying through the
Hyderabad stores. First set of roll out included 11 stores all located in the same city. First day
turnover was INR 2.2 million. The company is targeting at least 35 outlets in major cities.
Expansion is planned and is in progress to cover immediately Delhi, Mumbai and nearby
areas in the first phase. They are planning 70 cities and 784 urban towns and 6000 odd rural
mandi towns to cover 100 million sqft of retail space backed by about 68 strong distribution
network by year 2011.The company expects to get sales approximately of INR 1000 billion.
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FAQ’s- CUSTOMER INSIGHTS
What is organic?
Organic refers to the way agricultural products — food and fiber — are grown and processed.
Organic food production is based on a system of farming that maintains and replenishes soilfertility without the use of toxic and persistent pesticides and fertilizers. Organic foods are
minimally processed without artificial ingredients, preservatives, or irradiation to maintain
the integrity of the food.
What does "Certified Organic" mean?
"Certified Organic" means the item has been grown according to strict uniform standards that
are verified by independent state or private organizations. Certification includes inspections
of farm fields and processing facilities, detailed record keeping, and periodic testing of soil
and water to ensure that growers and handlers are meeting the standards, which have been
set. Certified Organic is the only way to guarantee that the product is organic. Producers
cannot use the term ‗Organic‘ legally without certification. To bypass this legal requirement
for certification, various alternative approaches, using currently undefined terms like
"natural" instead of "organic", are emerging.
Who regulates the certified organic claims?
In India, APEDA regulates the certification of organic products as per National Standards for
Organic Production. "The NPOP standards for production and accreditation system have been
recognized by European Commission and Switzerland as equivalent to their country
standards. Similarly, USDA has recognized NPOP conformity assessment procedures of
accreditation as equivalent to that of US. With these recognitions, Indian organic products
duly certified by the accredited certification bodies of India are accepted by the importing
countries
Are all organic products completely free of pesticide residues?
Certified organic products have been grown and handled according to strict standards without
toxic and persistent chemical inputs.
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Is organic food better for you?
There is mounting evidence at this time to suggest that organically produced foods may be
more nutritious. Furthermore, organic foods and fiber are spared the application of toxic and
persistent insecticides, herbicides, fungicides and fertilizers. In the long run, organic farming
techniques provide a safer, more sustainable environment for everyone.
Why does organic food sometimes cost more?
Prices for organic foods reflect many of the same costs as conventional items in terms of
growing, harvesting, transportation and storage. Organically produced foods must meet
stricter regulations governing all of these steps, so the process is often more labor- and
management-intensive, and farming tends to be on a smaller scale. There is also mounting
evidence that if all the indirect costs of conventional food production — cleanup of polluted
water, replacement of eroded soils, costs of health care for farmers and their workers — were
factored into the price of food, organic foods would cost the same or, more likely, be cheaper.
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MAIN COMPETITOR- NAMDHARI FRESH
Namdhari's Fresh (NF), a unit of Namdhari Seeds started in 2000 at Bangalore - 'The Garden
City of India', with a view to export fresh vegetables and provide a premium quality produce
to domestic customers. Namdhari Seeds is a market leader in Indian Vegetable Seed Industry
and a leading Exporter of Vegetables and Flower Seeds.Presently, more than 40 different
vegetables and fruits are being cultivated by Namdhari's Fresh at various productions centers
across the country.
Namdhari's Fresh is also involved in natural farming to produce and supply Organic
Vegetables and Fruits in the International market with the blessings of His Holiness Shri
Satguru Ji, who himself is a strong believer of organic farming.
The natural gift of suitable climate, availability of sufficient infrastructure, technical
manpower and the applications of advanced technology in Production, Processing, Grading,
Packing, storage, Transportation, Communication and with dedicated skilled laborers enables
this company to produce and sell one of the best quality vegetables and fruits for Fresh
Market to meet the International Standards.
To ensure the freshness of the vegetables till it reaches the consumer, the company is having
a continuous cold chain network right from the produce is harvested. The harvested
vegetables are transported in refrigerated trucks, which also helps in the removal of field heat.
From the refrigerated trucks, the vegetables are transferred to the pre-cooling room.
Then the vegetables are transferred to the grading hall, which is also air conditioned and
packed under cool climate. The packed vegetables are stored in the cold rooms before being
air lifted to the destinations and during the transit in the air also, the product is stored in
reduced temperature. Thus the uninterrupted cold chain network makes Namdhari's Fresh to
deliver the quality vegetables with optimum freshness. The good number of Flights per week
to Europe guaranties a regular supply of produce
Namdhari's Fresh is a certified ORGANIC PRODUCER. It has become India's first
vegetables growing and exporting firm, which has received EUREP-GAP Certificate. The
pack house is under implementation of BRC and HACCP, however all the norms, essential
for the same are practiced. Ethical trading is their corporate philosophy and implementation
of SA 8000 is part of their commitment.
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STRATEGIES
HOW AND WHY OUR BRAND “PURE” WILL SUCCEED?
Ability of the companies to achieve economies of scale and supply chain integration
leading to cost reduction , improved stock turnover and better credit terms from
vendor
Building scalable model that is replicable across regions and extending models to
smaller cities and towns
Passing on benefits of lower costs to consumers offering better value proposition than
what neighbourhood stores offer.
Home delivery to match the customer convenience offered by the unorganized
segment
Better shopping environment benchmarked to international standard
Focus on private label particularly for staple foods
Extend into other categories for private label brands
Health and physical fitness are current trends that might be combined with organic
food.
Organic food in combination with regionality shows a promising market potential.
To attract new consumers interested in, for example, chilled or functional food, the
organic product range should be enlarged by innovative and imaginative products.
The organic product policy should focus on high-quality products to strengthen the
quality image.
More communication activities are needed to increase consumers' brand and product
knowledge.
Organic products should be placed among their conventional equivalents rather than
in separate blocks, in order to be noticed by occasional buyers.
CHALLENGES WE HAVETO OVERCOME
Efficiency related issues in supply chain management areas for significant cost
reduction
Food and grocery is still a localized affair. People are unwilling to travel far off
distances for grocery shopping when options are available nearby. Finding solution to
this issue is thus a big challenge.
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also indicate the depth of desire for organic foods; a dedicated group of consumers interested
in organics will take whatever is available.
If organics are not available consumers look for other product attributes as well as organic.
Sixty percent of those surveyed are also interested in products with no artificial ingredients,
55 percent are interested in no preservatives, and 11 percent are interested in buying products
from firms that give a percentage of their profits to charity. In the livestock industries, how
animals are treated is an important consideration for some consumers. There are other ways
to appeal to health and socially conscious consumers besides going organic. This could be
especially important for dairy and livestock producers and processors who are having
difficulty obtaining organic feed.
Women are somewhat more likely to purchase organic foods as are people aged between 18and 24. The level of income and region of the country where the consumer lives appears to
have less impact in determining organic purchases.
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CUSTOMER SEGMENTS FOR “PURE”- CLUSTERS
1. True Naturals
2. New Green Mainstream
3. Affluent Healers
4. Young Recyclers
True Naturals
The True Naturals (roughly 7-11percent) hold the strongest views on environment.
Consumers in this segment tend to act on their beliefs. They regularly purchase organic food
and earth-friendly products and are willing to pay premium prices.
New Green Mainstream
The New Green Mainstream consumers are concerned about the environment, in particular
the impact of chemical fertilizers and pesticides. While they may have purchased organic
foods in the past, this group has found barriers for further purchasing to be availability, price
and other criteria. However, given the maturing of the industry (i.e. increased availability,
selection, etc.), the new green mainstream consumer is likely to grow.
Affluent Healers
The last two segments are well named. Affluent healers are wealthy, older people interested
mainly in their health - the nutritional aspect of organic food is more important to them than
the environmental aspects.
Young Recyclers
Young recyclers are young, single individuals who, although they claim to be
environmentally sensitive, do not follow through unless it is very easy to do (e.g. recycling).
With the exception of the True Naturals, these other segments of the population must meet
their own core purchasing criteria before they purchase organic. These criteria include taste,
convenience, price, nutrition, health and ease of preparation. The importance of some of these
factors will be seen a little later. However, all things being equal, the environmental aspect of
a product may be the tie-breaker in terms of purchasing.
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CONCLUSION
The organic food market is in the process of being split into two groups. The first and largest
is the market for organic foods that are considered by consumers to be healthy. The needs of
this group of consumers are increasingly being met by large scale producers, processors and
retailers of organic food. These consumers also tend to be somewhat price sensitive. In order
to supply this market being a low cost producer is very important. This market is in the
process of becoming a commodity market. Many large food processors and retailers are
increasingly becoming involved in this market segment.
The second market is the market for organics as a social choice. In additional to being
perceived as a healthier option, these consumers buy organic because they believe buying
organics is good for the environment, support sustainable farming systems, support humane
treatment of livestock, and support alternative retailers. For many of these consumers locally
grown food is an important product attribute. While this market is smaller than the first
market, it has the potential for high profit margins and it creates opportunities for smaller
producers and processors who may have higher production costs. Direct marketing through
farmers markets or by other means also has potential for local producers. This market
segment still presents opportunities for smaller producers and processors interested in
providing products with attributes above and beyond organic.
The market for organics continues to grow in all food categories. Perhaps because it is the
most established the market is fruits and vegetables, it may be somewhat more difficult to get
established in this market. Perhaps the markets that show the most potential are dairy and
meat, the primary difficulty in becoming established in this market is the lack of organic feed.
The demand for all organic food products remains strong, this includes the market for
processed foods and prepared organic meals. The potential for profits in the organic food
sector exists for all industries along the supply chain. This is especially true for products in
the social choice market segment.
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QUESTIONNAIRE
Dear friend,
Kindly spend a few minutes on filling the below questions organic and natural food. We really appreciate this
kind gesture.
1. According to your which colour comes to your mind with name ―organic‖?
Blue Yellow Green Red Orange Brown White Purple Black
2. What is the first word that comes to my mind when I say Organic?
........................................................................
3. What do you know about Organic products?
......................................................................................................................................................................
4. If some offers me Organic vegetables or fruits my first reaction would be
................................................................................................................................................5. Statements Strongly
agree
Somewhat
agree
Neither agree
nor disagree
Somewhat
disagree
Strongly
disagree
I feel Organic refers only to Vegetables &
Fruits.
It interests me to know more about Organic
products.
Organic products are expensive
According to me all Organic outlets sell
pretty much the same things
When I see a new organic brand/store, I‘m
not afraid of giving it a try
In general I am the last in my friends circle
to know the name of the stores that have
opened recently
6. Organic Vegetables/Products are ( rank in order of preference, 1being highest and 5 being lowest)
.......Wholesome
.......Healthy
.......Reliable
.......Upper class
.......Tasty
7. To me, ORGANIC is........
1 2 3 4 5
Important Unimportant
Expensive Cheap
Relevant Irrelevant
Meaningful Meaningless
Healthy Unhealthy
Yummy Tasteless
Appealing Unappealing
Interesting Boring
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8. Have you heard of the Namdhari chain of outlets? Yes No
9. NAMDHARI is.............
Expensive 1 2 3 4 5 Not Expensive
Accessible 1 2 3 4 5 Difficult to locate
Extensive stock 1 2 3 4 5 Out of stock
Knowledgeable staff 1 2 3 4 5 Not informed staff
Interesting Ambience 1 2 3 4 5 Boring Ambience
Irresistible 1 2 3 4 5 Uninteresting
10. Which of the following describes the chance that you will buy from the Pure/Namdhari outlet?
..........I will definitely buy things from here
..........I will probably buy something
..........I am uncertain whether I will buy something
..........I probably will not buy anything
..........I will definitely not buy anything.
11. Kindly tick on the appropriate column.
Statements Always Often Sometimes Rarely Never
I feel emotionally attached to my cooking
I take good care of my family
I trust my friends when it comes to advice on buying
food products
I go overboard while shopping and get excited with
the variety of vegetables in a retail store
12. Tick the statements that suit you the best, when it comes to purchasing Organic products.
StatementsStrongly
agree
Somewhat
agree
Neither agree
nor disagree
Somewhat
disagree
Strongly
disagreeAssurance that my family & I will have a healthy
living
Knowing that I eat fresh and chemical free
vegetables
The Good Packaging makes me want to buy it.
The adequate pricing fits in my budget and
provides value for my money
I have more variety to choose from.
I get stuff which is not easily available
everywhere.
It sorts me apart from the crowd.
Dealers have something for my kitchen garden.
Not having to go too far, the outlets are in my
reach.
At organic outlets it‘s even possible to try the
food.
Purchasing makes me stand out and I also have
an opportunity to show off.
I feel I am in safe hands and trust that the items
are chemical free.
I can live without it, but I‘d rather not.